As General Motors prepares to file for Chapter 11 bankruptcy protection today, the American press is this morning stressing what a huge gamble the Obama administration is taking. The Wall Street Journal calls it a "wagering upwards of $30bn" and the New York Times says it's a "risky bet".
The WSJ says: "The government, which will own the majority of the company, is wagering upwards of $30bn that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive carmaker by summer's end."
It points to the myriad risks — legal challenges from creditors, a drag on profits from pension obligations, factory closures, brand disposals, uncertainty over when consumer spending might rebound and the potential for political interference.
Nevertheless, there remains a realistic prospect of success and the WSJ is impressed GM has come as far as it has in such short time. "The Obama administration, for its part, has navigated the GM rescue so far with notable speed, clearing away many of the biggest obstacles in just months with less drama than many expected. In six to 18 months, GM could be a publicly traded company again, administration officials said."
The Washington Post focuses on the next struggle over the future of GM with bondholders and unions locking horns in the courts. "The fairness issue will be central as the GM bankruptcy case goes before a judge this week: Does the government-sponsored restructuring plan equitably accommodate all of the company's stakeholders? It is a legal and a political question, pitting company workers against investors, and it will be debated in and out of court." Obama has already described some of the lenders as "speculators".
In Detroit, the home of GM, the Free Press looks at question marks over the future of the company's headquarters, the Renaissance Center, also know as the RenCen, in the city. The building, it says, has been put on the list of assets to be disposed of in bankruptcy.
"After frantic phone calls, letters and tax incentives being offered from two different cities, GM said Sunday it has much more on its plate than thinking about moving its world headquarters from the 73-story glass-and-steel towers at the Renaissance Center."
For the New York Times, the move on GM is Obama's "risky bet that by temporarily nationalizing the one time icon of American capitalism, he can save at least a diminished automaker that is competitive."
The newspaper describes the moment as "a reckoning for an industry that was once at the heart of the American economy."
"It culminates a remarkable four months of confrontation between Washington and Detroit that is expected to result in a drastic downsizing of the company. It also places the government in uncharted territory as a business owner, as it takes a 60% ownership stake in the company during its restructuring."
